Ga. income tax cut advances
Georgia will lose an estimated $270 million a year under an income tax cut bill that passed out of the Senate Finance Committee Wednesday.
But the committee made it bud get-neutral by merging it with an internet sales tax bill expected to raise roughly the same amount for the state by 2018.
House Bill 61 will require companies that are not located in Georgia to pay sales tax if they do at least $250,000 worth of online business in the state. Finance Committee Chairman Chuck Hufstetler, R-Rome, said it also would bring in about $202.5 million in local
“Local brick-and-mortar stores were at a disadvantage, because they have to collect sales tax,” Hufstetler noted. “This will restore money local governments weren’t getting and it will pay for the state income tax cut.”
The committee merged the legislation with HB 329, which originally called for dropping the state income tax to 5.4 percent from 6 percent.
However, Hufstetler said the committee tweaked the numbers to retain a lower rate for people earning less than $10,000. They also changed the proposed tax to 5.65 percent but increased the personal exemption by $300, to $7,000.
“Under the House plan, 64 percent of the people in the lower brackets would see a tax increase,” he said. “Under this plan, everyone gets a tax cut, from richest to poorest.”
If it passes the Senate, as expected, the revised bill will have to go back to the House, which can agree to the changes or send it to a conference committee to work out the differences.
Lawmakers have three business days left in the 40-day session, which is scheduled to end March 30.
The Finance Committee wrapped up its last session without taking action on HB 93, aimed at addressing the problem of paying interest on refunded sales tax overpayments.
Rome and Floyd County governments and schools were socked with a $4.5 million bill in 2015 when an unidentified local business claimed it had overpaid its sales taxes between 2005 and 2013.
The amount included $1.3 million in interest, set by state law at a flat 12 percent. The Legislature reset the rate in 2016 to the prime rate plus 3 percent, equal to 7 percent today.
Hufstetler said the version that passed the House relieves the entity of paying interest if they underpay but allows them to collect interest on overpayments if claimed within three years.
“It’s almost the opposite of what was intended,” he said.
The measure could still be tacked on to another bill during the last days of the session, or revived when the Legislature meets next year.
Read this story online for a link to the Senate Finance Committee website.